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Feds subpoena state housing agency

Joe Guillen, Detroit Free Press
Published 9:16 p.m. ET Feb. 2, 2017

Women hold signs for the media thanking the city of Detroit as they watch the City of Detroit Construction Services workers tear down an abandoned structure across from Bennett Elementary School in Detroit on Thursday, May 12, 2016.(Photo: Ryan Garza, Detroit Free Press)

The MHA, in collaboration with the Michigan State Housing Development Authority, evaluates requests from municipal demolition programs for federal reimbursements from the Hardest Hit Fund, from which more than $250 million has been allocated to Detroit.

It processes requests for two types of federal assistance — money for blight demolition and mortgage relief for struggling homeowners. Last week, the agency demanded Detroit's demolition program pay back $7.3 million for improper reimbursements for blight demolition.

Although the two subpoenas came from SIGTARP — the federal agency investigating Detroit's demolition program — officials say the subpoenas are unrelated to the city's program.

MHA Vice President Mary Townley said the subpoenas came after the MHA would not provide SIGTARP with the data because it contained personal information. After the MHA declined to hand over the data voluntarily, SIGTARP delivered a subpoena, Townley said.

"We've received only two subpoenas ever, and they're not on the Detroit program at all," Townley told the Free Press on Jan. 19. "They are from SIGTARP, asking for specific data for the entire Hardest Hit program."

SIGTARP is a watchdog and law enforcement agency responsible for monitoring the Hardest Hit Fund. As part of its criminal investigation into Detroit's demolition program, it subpoenaed the Detroit Land Bank Authority and the Detroit Building Authority in May.

The Free Press obtained the two subpoenas to the MHA under the Freedom of Information Act.

Katie Bach, a spokeswoman for the Michigan State Housing Development Authority, said in a statement Thursday that it is not unusual for SIGTARP to conduct reviews and audits of the national program for its quarterly reports.

"My understanding is the two subpoenas were requested as a direct result of issues involving other participating states, and not related to the Detroit demolition investigation," Bach said.

The subpoenas request data files of "raw Hardest Hit Fund (HHF) application level data." The subpoena in September seeks data as of the second quarter of last year and the December subpoena requests data as of the third quarter. Both also demand "current policies and procedures applicable to the HHF Applicant Data File such as applicant intake management and eligibility criteria for HHF programs."

There are significant differences between SIGTARP's subpoenas to the MHA and the Detroit agencies.

The subpoenas to the MHA came from SIGTARP's general counsel, B. Chad Bungard, and they cited the need for information for an audit. The subpoenas to the Detroit demolition agencies referenced an "ongoing investigation" and were delivered by a "criminal investigator/special agent" whose name was redacted under a FOIA exemption.